Podcast by

Pablo Giorgi
Global Olefins

Luka Powell
Financial & Capital Markets

Luka Powell (00:20):

Welcome to the Olefins Weekly Wrap Up. Today is Friday, April 5th, and I’m your host Luka Powell.

Pablo Giorgi (00:27):

And I’m Pablo Giorgi.

Luka Powell (00:29):

And together, as Chemical Market Analytics, we recap the top events moving the ethylene and propylene markets over the past week. The design of this podcast is to complement the content from the North America Light Olefins weekly service, otherwise known as the NALO weekly.

Pablo Giorgi (00:47):

Oh, Luka. Next Monday, there will a be a Total Solar Eclipse here in the US. The sun will be completely covered by the moon for up to 4 minutes in a path that goes from Texas to Maine.

Luka Powell (00:59):

Wow, that’s going to be a cool event to watch!

Pablo Giorgi (01:02):

Yep! Talking about watching the eclipse, Luka, How do you organize a solar eclipse watch party?

Luka Powell (01:09):

I don’t know. How do you?

Pablo Giorgi (01:11):

You plan it.

Luka Powell (01:13):

It never gets old.

Pablo Giorgi (01:15):

But you know what else never gets old? The energy markets!

Luka Powell (01:20):

WTI crude futures jumped to settle at $86.59, and Brent hit $90.65 a barrel – that’s the highest they’ve been in over five months. Why the spike? Tensions are high in the Middle East and Eastern Europe, and market participants are wondering if oil will hit the $100 mark. OPEC’s keeping production steady in general, even as some members pump out more than their quota. On natural gas, Europe’s gas storage is looking good, 59.4% full – better than last year, so they’re set for the winter, potentially reducing volatility in TTF natural gas prices.

Over in Northeast Asia, LNG prices dipped a bit to $9.16 per million BTU. The earthquake in Taiwan earlier this week should not affect natural gas pricing. In the US, Henry Hub prices remained relatively stable, settling at $1.774 per million Btu this Thursday. Demand has been underwhelming, and storage is down. The big question remains: when will prices rebound?

Pablo Giorgi (02:26):

Moving over to the NGL markets, purity ethane prices increased this week from 17.75 to 19.25 cents per gallon. Ethane frac spreads, the difference between ethane and natural gas prices, increased slightly from 6 to 7.5 cents per gallon as ethane demand into crackers increased with the end of some ethylene crackers maintenance turnarounds.

April non-TET propane also increased this week, closing this Thursday at 84.50 cents per gallon, up 2.4 cents per gallon from last week. The increase was less steep than crude oil price increases this week, though, and propane continues to lose strength against crude as spring continues to warm up the weather. That’s it for NGLs, now onto ethylene.

Luka Powell (03:18):

The week was moderately active for ethylene spot deals, with 88 million pounds completed at the Texas and Louisiana hubs. Prices increased, ranging between 18.75 and 21 cents per pound for April delivery. The gap between Choctaw and Mont Belvieu prices is now more than 2.0 cents per pound due to supply issues in Louisiana. The March ethylene Net Transaction Contract price settled on Monday down 1 cent per pound versus the February benchmark. Ethane cracker feedstock prices fell the previous week, but have rebounded this week to above 19.00 cents per gallon for the first time since early March.

The last three first quarter turnarounds were completed by the end of last month, and with no second quarter turnarounds currently scheduled, USGC cracker operating rates are expected to increase to the mid-80s percent this month. The resulting build in ethylene stocks is expected to continue through the second quarter, which is also expected to put pressure on producer margins. Demand from ethylene derivatives is improving with PE, styrene, glycols, and PVC production forecast to increase.

In addition, exports for ethylene and ethylene derivatives are expected to be strong with the latest data for February coming out next week. The ethylene forecast has not changed this week, see the NALO for more information.

Pablo Giorgi (04:40):

US polymer grade propylene spot prices declined again this week, from 45 cents last Thursday to 42 cents per pound this Thursday. The market was active with 56 million pounds transacted. The April US Gulf Coast PGP 45-day weighted-average price is 43.48 cents per pound, a decrease of more than 10 cents per pound from the March 45-day weighted-average price. The refinery-grade propylene spot market was quiet this week, with no deals recorded for April delivery. Several planned and unplanned outages at downstream plants continue this week. Not only is that leading to lack of interest in April pounds, but also more availability from the suppliers. So far, traders have stepped in to take advantage of falling prices and replenish inventories. Demand should be back up mostly by the end of April, rebalancing the market.

Additionally, from a Supply and demand standpoint, the current low 40s price should be enough to boost additional demand. Nevertheless, in the short term, this price level might not be enough of an incentive to move pounds this month. If the sale needs to be done this month, lower levels of pricing might be necessary. We’ll all continue to follow this volatile market situation.

The propylene forecast has changed this week, see the NALO for more information.

And with that, let’s wrap up this week’s Wrap Up!

Luka Powell (06:12):

Don’t forget to subscribe to our podcast on Soundcloud, Spotify, Apple or Google podcasts, or wherever you get your podcasts, and give us a like or leave a review if you enjoy it. And if you have questions or want us to cover something more specific, you can send us an email. Until next time.

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